Microeconomics Unit 1 Munday
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12 Terms
What does it mean to do economics?
You must cultivate a healthy curiosity & come ready to understand the world
Why study economics?
Helps you understand the mysteries of society and the world
What is scarcity?
Limited quantities of resources to meet unlimited wants
opportunity cost
- Value of option you forgo when making decisions
- We consider the explicit & implicit costs of such actions
Sunk cost fallacy
reluctance to abandon course of action because of previous investments
intrinsic vs. extrinsic incentives
personal feelings vs. things to be gained
utility
benefits (max gain, min loss)
4 factors of production
land
labor
capital
entrepreneurship
command vs. market economy
command: determined by central institution
market: determined by private actors
invisible hand
coordinates prices & allocates scarce resources
opportunity set
illustrates range of choices availible
comparative advantage
who has the lower opportunity cost to produce a product
